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May 1, 2023

Credit is still expanding in the US, but conditions are getting tighter

The author is the chief economist of the National Association of Credit Management.
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Amy Cutts
Chief Economist
National Association of Credit Management
The National Association of Credit Management ( is an association of credit and financial executives [managing accounts receivables]. The NACM publishes a monthly index that measures US credit trends and business conditions.
All opinions expressed in this content are those of the contributor(s) and do not reflect the views of Macrobond Financial AB.
All written and electronic communication from Macrobond Financial AB is for information or marketing purposes and does not qualify as substantive research.

We are seeing the first signs of the banking crisis that erupted in March. 

Although actions by the Fed, the FDIC and the Treasury Department have alleviated some of the stress, credit tightening is being felt throughout the economy. 

The National Association of Credit Management’s seasonally adjusted combined Credit Managers’ Index (CMI) for April came in at 57.2 points, up 0.3 points from March and the highest level for the index since September. Sales improved, which is certainly a good sign relative to recession risk.

But some of the underlying trends in our survey are concerning, and the small change in the overall CMI figure is deceiving in its impact.

The index for applications for new credit was up a bit from last month and is at a very strong level, but the index for approvals for new credit plummeted and is now well into contraction territory, which is disheartening. 

Many accounts receivable managers were already concerned about customers hoarding cash and delaying payment until absolutely necessary, and the situation is getting worse. Several respondents in the CMI survey mentioned financial stress among their accounts, with one noting a sudden rise in bankruptcies and another citing more requests for extended or modified terms as banks tighten credit.

Several respondents indicated that they are having to work with customers having cash flow problems due to capital being tied up in inventories, which requires them to be flexible on terms. But that can only go on so long; these firms also have obligations that must be met.

Key Findings from the April 2023 CMI:

  • The index for favorable factors was up 1.4 points to 59.7, led by a 2.8-point improvement in the sales factor index to 59.3 points and a 2.1-point gain by the dollar collections index to 61.8. The new credit applications factor index held steady at 58.8, meaning that, on net, applications are growing.
  • The sales factor index again had its highest reading since September 2022, when it was at 63.6 points. Importantly, that signals that the January lull was an anomaly.
  • The index for unfavorable factors fell 0.6 to 49.8. This index has stayed in a tight range around 50, showing neither a steady improving nor declining trend over the past year.
  • All but two of the unfavorable factor indexes deteriorated in the April survey; the index for dollar amount beyond terms improved by 1.3 points to 54.1 and the index for accounts placed for collection was essentially unchanged.
  • Notably, rejections of new credit applications slid 2.7 points to 47.9, its lowest level since July 2009 during the great recession and financial crisis.
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